Transforming Distressed Assets in Emerging Economies

For almost two decades, IFC has played a critical role in supporting the development of distressed assets markets in emerging economies through its Distressed Asset Recovery Program (DARP).

Download: DARP Brochure | DARP Factsheet

DARP invests in and recovers distressed assets, participates in the restructuring of viable entities, and offers refinancing solutions to borrowers in distress. DARP plays a critical role in addressing high levels of distressed assets, which is key to preserving financial stability, restoring access to formal credit, and preventing the loss of assets.

As of December 2024, IFC together with its partners had committed a combined $9.2 billion in NPLs — $3.2 billion from IFC and $6 billion mobilized from its partners.

DARP’s investments, including mobilization, have allowed financial institutions to offload over $46 billion in face value of NPLs, enabling more than 21 million households and businesses to access credit markets.

^{Data as of December 2024}

Creating Markets for Distressed Assets

As part of its strategy to develop distressed assets markets, DARP engages with asset management and servicing companies to invest in this asset class, considering investment strategy, skill set and risk appetite. DARP and its partners offer tailored restructuring options to borrowers in the form of principal discounts, interest rate reductions, adaptable/flexible repayment plans and, when appropriate, debt forgiveness.

In countries where non-performing loan (NPL) sales and the resolution of distressed assets remain underdeveloped or non-existent, DARP actively supports WBG colleagues in their work with regulators and banks to identify the reforms necessary to create distressed assets markets that allow for the active participation of private investors, both domestic and foreign.

In markets undertaking reforms, DARP monitors progress in order to be prepared to step in and provide liquidity to support investors and servicers when NPL sales to non-bank entities become a reality.